The Public Service Loan Forgiveness (PSLF) Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.

If you want to qualify for Public Service Loan Forgiveness now or in the future, complete and submit the Employment Certification form as soon as possible. Too many borrowers wait to submit this important form until they have been in repayment for several years, at which point they learn that they have not been making qualifying payments. In order to ensure you’re on track to receive forgiveness, you should continue to submit this form both annually and every time you switch employers.

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Under the Teacher Loan Forgiveness Program, if you teach full-time for five complete and consecutive academic years in a low-income school or educational service agency, and meet other qualifications, you may be eligible for forgiveness of up to $17,500 on your Direct Subsidized and Unsubsidized Loans and your Subsidized and Unsubsidized Federal Stafford Loans.

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Federal Perkins Loan cancellation is based on eligible employment or eligible volunteer service and the length of time that you were in such a position. Discharge of your Perkins Loan may occur under certain circumstances.

Perkins Loan Teacher Cancellation

What are the eligibility requirements? Who is considered a teacher? How long must I teach? What amount can be canceled for teaching service?

What are the eligibility requirements?

You qualify for cancellation of up to 100 percent of a Federal Perkins Loan if you have served full-time in a public or nonprofit elementary or secondary school system as a

• teacher in a school serving students from low-income families;
• special education teacher, including teachers of infants, toddlers, children, or youth with disabilities; or
• teacher in the fields of mathematics, science, foreign languages, or bilingual education, or in any other field of expertise determined by a state education agency to have a shortage of qualified teachers in that state.

Eligibility for teacher cancellation is based on the duties presented in an official position description, not on the position title. To receive a cancellation, you must be directly employed by the school system. There is no provision for canceling Federal Perkins Loans for teaching in postsecondary schools.

Note that you also qualify for deferment while you’re performing teaching service that qualifies for cancellation. Contact your college or your college’s Perkins Loan servicer for information on applying for deferment.

Who is considered a teacher?

A teacher is someone (including for example, a school librarian or guidance counselor) who provides elementary or secondary school students with direct services directly related to classroom teaching.

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A total and permanent disability (TPD) discharge relieves you from having to repay a William D. Ford Federal Direct Loan (Direct Loan) Program loan, Federal Family Education Loan (FFEL) Program loan, and/or Federal Perkins Loan (Perkins Loan) Program loan or complete a Teacher Education Assistance for College and Higher Education (TEACH) Grant service obligation on the basis of your total and permanent disability. Before your federal student loans or TEACH Grant service obligation can be discharged, you must provide information to the U.S. Department of Education (ED) to show that you are totally and permanently disabled. ED will evaluate the information and determine if you qualify for a TPD discharge.

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Federal student loans will be discharged due to the death of the borrower or of the student on whose behalf a PLUS loan was taken out.

What happens to my loans if I die? What happens to my parent’s PLUS loan if my parent dies or if I die? What proof of death is needed to discharge a loan?

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You may have your federal student loan discharged in bankruptcy only if you file a separate action, known as an “adversary proceeding,” requesting the bankruptcy court find that repayment would impose undue hardship on you and your dependents.

What circumstances do I need to prove to have my loan discharged in bankruptcy? How do bankruptcy courts determine undue hardship? What happens to my loan if the bankruptcy court determines repayment would cause undue hardship? What can I do if the bankruptcy court doesn’t discharge my loans but I can’t afford the payments?

What circumstances do I need to prove to have my loan discharged in bankruptcy?

You must declare Chapter 7 or Chapter 13 bankruptcy and demonstrate that repayment would impose undue hardship on you and your dependents. This must be decided in an adversary proceeding in bankruptcy court. Your creditors may be present to challenge the request.

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How do bankruptcy courts determine undue hardship?

The bankruptcy courts do not use a single test to determine undue hardship but may look at the following factors to determine whether requiring you to repay your loans would cause an undue hardship:

• If you are forced to repay the loan, you would not be able to maintain a minimal standard of living.
• There is evidence that this hardship will continue for a significant portion of the loan repayment period.
• You made good faith efforts to repay the loan before filing bankruptcy.

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What happens to my loan if the bankruptcy court determines repayment would cause undue hardship?

It depends on the terms of the bankruptcy court’s determination. The terms may include the following:

• Your loan may be fully discharged, and you will not have to repay any portion of your loan. All collection activity will stop.
• Your loan may be partially discharged, and you will still be required to repay some portion of your loan.
• You may be required to repay your loan, but with different terms, such as a lower interest rate.

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What can I do if the bankruptcy court doesn’t discharge my loans but I can’t afford the payments?

Many different repayment plans exist, and switching to a plan that’s a better fit is usually a possibility. Contact your loan servicer if you would like to discuss repayment plan options or change your repayment plan. You can get information about all of the federal student loans you have received and find the loan servicer for your loans by logging in to “My Federal Student Aid.”

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There are certain criteria that make you eligible for a closed school discharge, and there are certain steps you need to take to get a discharge.

Note that you might need your academic records if you plan to attend another school and want to have your coursework at the closed school taken into consideration. So it will be important for you to obtain your academic and financial aid records if your school closes. Contact the state licensing agency in the state in which the school was located to ask whether the state made arrangements to keep the records. The records might also be useful in substantiating your claim for a loan discharge.

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In addition to the types of forgiveness, cancellation, and discharge shown above, you may also be eligible for discharge of your federal student loans based on borrower defense to repayment if you took out the loans to attend a school that misled you, or engaged in other misconduct in violation of certain state laws, and if the school’s act or omission directly related to your federal student loans or to the educational services that you paid for with the loans.

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